"We're aiming to get a 40% thermal efficiency for an internal combustion engine which is comparable to the best diesel engines out there now," says Brear.

Brear says the engine should be operational by the end of the year and his team is also working on a hydrogen storage device.

The storage of enough hydrogen on-board to allow cars to travel long distance is a major technical hurdle for hydrogen vehicles. But Brear says the more efficient an engine the less hydrogen will need to be used and stored.

He says putting the engine in an electric hybrid vehicle would provide a car with equivalent mileage to a prohibitively expensive hydrogen fuel cell vehicle, but at a price similar to an existing hybrid vehicle.

He says the $3 million-project that also involves the University of Florida is receiving funding from the Victorian state government and industry collaborators Ford Australia, Haskel Australia and Core Gas.

No quick fix

David Lamb, Low Emissions Transport Leader at CSIRO's Energy Transformed Flagship in Newcastle, says roads full of hydrogen-powered cars are still decades off.

According to Lamb, hydrogen fuel is much more expensive than fossil fuels and there is no infrastructure, such as hydrogen service stations, to support the large-scale roll-out of hydrogen powered vehicles.

While hydrogen is the most abundant element in the universe, Lamb says capturing it, distributing it and storing it is complex and costly.

He says while hydrogen should be the ultimate future fuel he says it can't solve the immediate problems of greenhouse emissions and oil shortages.

"Hydrogen was 40 years away 40 years ago. It's still 40 years away," Lamb says.

Gas guzzlers

Rather than a simple silver bullet, Lamb says there will need to be a whole raft of technologies, policies and behavioural changes to ensure green transport becomes the norm.

Lamb says the central role of human behaviour is evident in the fact that although fuel efficiency of the average vehicle sold in Australia has improved by 20% in 20 years, we still consume as much fuel for the same number of vehicles.

"The improved fuel efficiency has been squandered by buying bigger vehicles. We bought more four-wheel drives and that guzzled up all the savings," he says.

While the skyrocketing price of petrol is now forcing people to buy more fuel efficient cars, car manufacturers are still advertising gas guzzlers, says Lamb.

No crystal ball

Brear doesn't want to speculate on how far off a hydrogen economy is.

"At the end of the day none of us have crystal balls," he says.

But, Brear says the world is changing rapidly in favour of alternatives to fossil fuels.

"What people even 12 months ago considered to be uneconomic is now economic," he says, giving the example of heavy duty trucks, many of which have turned to natural gas as a more economic alternative to diesel.